Investment Direction – Generic Portfolio Guidance

By now, you should have gained some insight into your own investment risk attitude. You should also have itemised your main financial goals and understood how much cash might be required at different stages of your life.

You may be in the fortunate position of not needing to invest into real assets for future life events. If, alternatively, you have identified a requirement to put money aside in order to meet certain objectives, then now may be a good time to plan a course of action.

The first point to make is that, irrespective of the rate of investment return demanded to meet a future financial need, you should never accept a level of risk with which you do not feel comfortable.

For example, if calculations show that a 7% per annum investment return will be required when only 3% p.a. interest is available for cash on deposit, you should appreciate that you are unlikely to meet your financial targets unless you are content to accept the greater risk and volatility associated with, for example, holding stock market investments.
In the same way that it`s often futile to expect a consensus from a group of economists, agreement on asset allocations within the financial world is also hard to reach. In order to help you, apart from conducting our own research and taking the average asset allocation position of prominent financial groups (opposite), we have listed (below) a couple of sources you may find useful for reference purposes.

  • The FTSE WMA Private Investor Indices (formerly APCIMS), a trade association which represents approaching 200 firms, produces a set of calculations which, amongst other things, provides a basis for reviewing the asset allocation and structure of your portfolio.

This can be found at the following link:

  • The publication, “Which?” has designed a helpful website where an attempt has been made to calculate levels of investment risk in different asset allocations – from which it has built eight different portfolios.

These, along with useful explanations, are available at:

Ideally, to mitigate the effects of adverse market timing, you should seek to achieve your final invested position by phasing into markets over a minimum of a 12 month period.

Critically, you should thereafter re-balance your portfolio on at least an annual basis to ensure your investment returns are optimised.

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Money Guidance CIC is an Appointed Representative of Alan Cheetham (Asset Management) Limited, a company which is authorised and regulated by the Financial Conduct Authority.

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